A SMSF is permitted to invest in Physical Metals. Clients of ESUPERFUND are permitted to use any Australian based Physical Metals Provider to purchase Physical Metals for their SMSF.
Australian Based Provider
Clients are only permitted to invest in Physical Metals using an Australian based Provider and cannot use an Overseas based Provider. This is due to the complexity involved in accessing the required data in the format required in relation to trading activities and currency movements involved with Overseas Providers. In addition, Overseas Providers typically do not recognise SMSF Investors and will typically setup accounts in the Trustees Individual names. This is a breach of SMSF laws and not allowed.
Account Must be setup in SMSF Name
When establishing a Physical Metals Account with an Australian based Provider the Account must be setup in the SMSF Name and not in the personal names of the Trustees. Most Australian based Providers will setup accounts in the name of the SMSF. Unfortunately if the Australian based Provider selected by you does not setup accounts in the SMSF name then you will be unable to use that Provider to invest in Physical Metals.
In relation to record keeping for Physical Metals, ESUPERFUND will send you a Checklist each year guiding you on what documentation we require to prepare your SMSF annual compliance requirements. This is typically all Trades during the Financial Year as well as confirmation of Physical Metals Holdings at 30 June each financial year.
Where the trustees of a Self Managed Super Fund (SMSF) take physical delivery of metals (i.e. store at home), the auditor of the SMSF will form the opinion (where no independent holding supporting document is provided) that they (the Auditor) will be unable to verify the holdings and value of the physical metal held at 30 June. In accordance with the Auditing Standards where the trustees have taken Physical delivery of metals the auditor will qualify his/her opinion and include this opinion in their Audit Report. In addition, Metals that are deemed to be collectables (such as coins) clients cannot take physical delivery of these Metals. This restriction is a legal restriction imposed by Super Laws which disallows a SMSF taking Physical delivery of Collectables.
Physical Metals purchased through a Physical Metals Provider should be insured through that Provider for security purposes. Accordingly when selecting your Physical Metals Provider you should ask that Provider whether metals purchased through their Platform are insured. It is noted that Collectables must be compulsorily insured by law. More details about Collectables can be found here.
Minute the Purchase
When you purchase Physical Metals for your SMSF you will need to minute how the Investment conforms to your Investment Strategy. Typical reasons for the purchase of Physical Metals are for capital appreciation, a hedge against inflation or a hedge against a depreciating currency. A Standard Minute can be found here.
Evidence of Holding at 30 June Annually
Data for Physical Metals purchased through an Australian Based Provider can be sent to ESUPERFUND at the end of the financial year. Documentation we require to prepare your SMSF annual compliance requirements would typically include all buys and sells, invoices detailing the name of the Superfund as the purchaser, an independent holding statement (if not held through an Australian Based Provider), a minute to be prepared by the trustees (see above) regarding the investment decision made as well as confirmation of the Physical Metal held at 30 June for the financial year.
Metals can be purchased in a variety of ways
It is also noted that ESUPERFUND clients are also permitted to trade Metals and Commodities using CFDs as detailed here. CFDs allow your SMSF to invest in a wide range of Metals and Commodities including but not limited to, Agriculture, Energy, Gold, Silver, Oil, Coffee and Sugar. CFDs allow you to bypass standardised futures trade sizes and trade smaller quantities. Importantly there is no risk of the metal actually being delivered. Clients of ESUPERFUND are also permitted to invest in Exchange Traded Commodities (ETCs). ETC's allow your SMSF to invest in Gold, Silver and other Commodities. ETCs track the performance of an underlying physical Commodity or Commodity Index allowing investors to gain direct exposure to the underlying Commodity without the need to trade futures or take physical delivery of the Commodity. Aside from the underlying asset, ETCs are very much like Exchange Traded Funds (ETFs) and are traded and settled on the ASX, just like shares, making them both accessible and affordable. More can be found here.
No financial product advice or recommendation
No Advice Express or Implied: It is important to understand that ESUPERFUND has not taken into account any particular investor's objectives, financial situation or particular needs. ESUPERFUND does not provide financial product advice or recommend any financial products either expressly or implied. ESUPERFUND expressly states that it does not recommend, represent as suitable, or endorse any financial product or service available through ESUPERFUND. This applies in relation to the Physical Metal Investments. ESUPERFUND does not advise or recommend that Physical Metal Investments are suitable to a particular investor’s financial requirements or needs in relation to their SMSF. Any information provided in relation to the Physical Metal Investments is factual information only about the operation of the Investment. Accordingly you should read the disclosures relating to investing in Physical Metal before making any decision about whether Physical Metal Investments are suitable for your SMSF needs. We also recommend that you should seek professional advice from a financial adviser before making any decision to invest in Physical Metal Investments for your SMSF.
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